Before we move on to account statements I just want to touch on
segregation of funds. In times past there was a danger that traders
who deposited money with a broker who did not segregate their
clients money from their own companies money were at some risk.
The problem arose if the broker misused the deposited funds to either
reinvest or manipulate these deposits to enhance their own standing.
There were also instances were the broker became insolvent and
many complications ensued as to what was the clients money and
what was the broker's money.
With the advent of regulation most brokers now segregate their
client’s funds from the brokerage funds. Deposits are normally held
with banks or other large financial institutions that are also regulated
and bonded or insured. This protects your money should anything
happen to your broker.
The deposit taking institution is normally aware that these deposits
are client's funds. Depending on regulation in the particular country in
which you live, each client may have their own segregated account or
for smaller depositors, they may be pooled. The point is that
segregation of funds is a safeguard. Ask your broker if your funds are
segregated and who actually has your money.
Just as with a bank you are entitled to interest on the money you
have on deposit. Some brokers may stipulate that interest is only
payable on accounts over a certain amount, but the trend today is
that you will earn interest on any amount you have that is not being
used to cover your margin.
Your broker is probably not the most competitive place to earn
interest but that should not be the point of having your money with
him in the first place. Payment on your account that is not being used
and segregation of funds all go to show the reputability of the
company you are dealing with.
In this section I will discuss briefly the basic account statements. I
have to keep this basic because as you can imagine, there are many
flavors of account statements.
Just about every broker has their own way of presenting this. The
most important thing is to know where you stand at the end of each
day or week. Just because your broker is Internet based and has all
the bells and whistles does not mean that they are infallible.
Many of the actions taken before information is imparted are still done
by hand, and if human beings are involved, there will be a mistake at
some point. The responsibility lies with you. It is your money so make
sure that all the transactions are correct.
FX Some Company
New York
Statement for: Mr. Joe Bloggs
Statement Date: 16th July 2002
Account No: 123456
Summary Of All Trades From: 15/07/02-17/07/02
Ticket No Time Trade Date Value Date B/S Symbol Quantity Rate Debit Credit Balance
123458 09:05 15/07/2002 17/07/02 B EUR/USD 100,000 0.9850 $10,000
123459 13:01 15/07/2002 17/07/02 S EUR/USD 100,000 0.9870 $200.00 $10,200
123460 14:05 16/07/2002 18/07/02 S USD/JPY 100,000 116.85 $10,200
Total Equity $10,200
Margin Available $9,200
Margin Requirements $1,000
Current Position Short USD/JPY
Normally there is a ticket or docket number to help identify the trade.
You will nearly always find the time/ date of the trade and the value
date if the currency was to be delivered. You should always see the
direction of the trade, buy or sell (Long or Short), the amount and rate
at which you bought or sold. Balance will let you know if you made a
profit or a loss.
You should also see any open positions you may have and the
margin requirements for that position. A lot of the more modern
systems will show your open position as though it has been closed
just to give you an up to the minute balance.
